A very serious matter affecting general aviation and the
rotorcraft industry has now been elevated to the leadership level
in both the House and Senate. General Aviation manufacturing tax
incentives, such as accelerated depreciation, have now come under
attack from President Obama and House and Senate Democratic leaders
and could be scrapped as part of a debt limit bargain between
Congress and the White House. At his Wednesday June 29 White House
Press Conference, Obama called on Congressional Republicans
to show flexibility on revenue increases as the August 2 deadline
for raising the debt ceiling approaches. At least five times during
his speech, Obama invoked tax breaks for corporate jets.

Democrats now see elimination of tax breaks and a change to the
depreciation schedule for general aviation aircraft as politically
attractive. While all the current rhetoric appears to be directed
toward “corporate jets”, any change to the depreciation
schedule would apply to pistons, turboprops and rotorcraft.

Senate Majority Leader Harry Reid (D-Nevada) took to the Senate
floor on Tuesday to accuse his Republican colleagues of walking
away from debt talk negotiations “to save and protect tax
breaks for wealthy oil companies and corporate jets”, this a
day after he had met privately with President Obama. Reid also took
to the Internet via his Twitter account, tweeting that “Rs
are living in a fantasy world, protecting tax breaks for corporate
jets and yachts when we need to reduce deficit
#WrongPriorities.”

Current law temporarily allows 100 percent depreciation in the
first year for business equipment, including commercial and general
aviation aircraft, but that provision is slated to expire at the
end of 2011. It is highly likely given the attention tax breaks are
receiving in the press this week that both political parties could
agree to what they would call revenue increases, which would be to
increase government revenues without actually raising any tax rates
by eliminating certain tax deductions.

Changing the depreciation schedule for general aviation aircraft
will negatively affect every segment of our industry, jeopardizing
over 1.2 million jobs throughout the United States. This type of
targeted legislative “solution” will lead to further
economic difficulties, will punish middle class workers, and result
in a significant detrimental effect on our industry. The current
depreciation schedule for general aviation aircraft has allowed
general aviation manufacturers to maintain skilled US jobs and
strengthen our ability to compete globally.

Removing the accelerated depreciation structure for general
aviation aircraft will not have any significant effect on the
growing US debt problem. The general aviation industry contributes
over $150 billion to the US economy each year, and general aviation
aircraft are an essential part of our transportation system
supporting many small and medium sized businesses and supporting
hundreds of engine, avionics, and component manufacturers which are
also small businesses.

HAI is urging members to take action while this issue is fresh.
They are asking for help getting the message to Washington to let
them know this is an ill-advised tax effort for which they are
unaware of the negative consequences that will compromise our
industry, affect employment numbers across the nation and in their
congressional district/state and weaken a domestic manufacturing
industry that contributes soundly to a positive trade balance.

Elected officials need to clearly understand that these type of
actions will not only effect the helicopter industry but their
constituents as well. Such a negative economic impact on daily
helicopter operations will constrain our ability to deliver the
many critical services we perform on behalf of the greater good,
such as EMS flights, aerial firefighting, law enforcement, search
& rescue, power line and utility repair, along with other
missions in support of the national energy infrastructure.

The U.S. House of Representatives is in recess this week, and
the U.S. Senate will be out of town next week. Members of Congress
will be in their Congressional Districts and face to face meetings
and phone calls, faxes, and emails to their offices are extremely
important at this time. To obtain contact information for your
Senator, visit www.senate.gov
and follow the links. To contact your elected Congressman or
Congresswoman, visit www.house.gov. If you need additional
assistance, contact Brian Spittler, HAI Government Affairs
assistant at brian.spittler@rotor.com.